China's Labor Problem In 2 Charts

Lately, we've been getting a lot of budding economic green shoots
from China. According to China's official
and
HSBC manufacturing PMI reports,
growth is reaccelerating.

This is a great sign for global demand as China is the world's
second largest economy.

However, China's laborforce is less and less able to meet the
demands of its growth. The working age population is shrinking
and hourly labor costs are rising.

"China in particular seems to have hit a ‘Lewis Turning Point’,
which is the point at which the excess low cost labour force is
exhausted, leading to increased wage inflation," writes Credit
Suisse's Andrew Garthwaite. "The 19- 24 year old age group is
peaking this year, with the broader labour force estimated to
peak in 2015. A rise in social security related costs is also
likely to happen over time (the costs falling probably on the
employer) again raising the relative cost of labour."